Posture Correction Software Shows the Way to a Healthy and Productive Ergonomic Life

Founder Story - Daniel James

Currently Co-Founder & CEO at PostureHealth, Daniel James is building solutions to help people achieve their workplace wellness goals so that they can live a more healthy and productive life. Before launching PostureHealth, he spent time in various B2B product, sales, and marketing roles at startups and large companies like Adobe. Daniel is a recent graduate of Yale University where he was a member of the 2017 Ivy League Championship Football Team, A Joseph Tsai Center for Innovative Thinking Fellow, and Startup Yale 1st Place Winner.

What does PostureHealth bring to the marketplace?

At PostureHealth we are building unified digital ergonomic solutions - everything from guiding you to sit better in your new remote work environment with our posture correction software, to treating carpal tunnel via our virtual PT telehealth services, PostureHealth is the only app that you need to live a healthy and productive ergonomic life. We're helping individuals and companies across the world adjust to the new, remote and flexible work world that we live in.

What was your motivation while building PostureHealth?

A big personal problem, and a great group of friends. I went from living an active athletic lifestyle while playing football at Yale University to sitting for over 8 hours a day working at my desk. I developed severe low back pain and carpal tunnel. Luckily, I worked at Adobe, an awesome company that really values employee health. I spoke with Mary Kay Gilhooly, a Global Wellness Manager at Adobe and she helped me realize that the problem was bigger than what I expected.

In fact, back pain due to poor ergonomics costs U.S. employers over $100B a year and is the biggest disease burden in developed countries. My close friend and soon to be co-founder Ion-Alexandru Secara worked on posture recognition software projects throughout college. With his tech skills, my business savviness, and our soon to be third co-founder, Jack Cooney's deep postural rehabilitation expertise, I knew that it would be fun for us to tackle this problem unlike anyone else before.

What do you think is the most challenging thing you're facing at PostureHealth?

Demand. We knew that flexible, remote work would be a trend when we started PostureHealth, but we had no clue that COVID-19 would accelerate the shift so rapidly. This has led to increased demand for our still very small team. We want to help as many people as we can, but we also do understand the importance of receiving feedback from early customers to ensure we have a "must have" product as we look to scale.

Can you tell me a little more about your background before starting PostureHealth?

I've always been a savvy business person. My principal threatened to expel me from middle school for selling so many snacks that I put the school's concession stand out of business. I'd buy the snacks in bulk from Costco and sell them to all my friends before the school concession stand opened everyday. After graduating from High School in Baton Rouge, Louisiana I decided to attend Yale University. This is where I became interested in technology, working for various startups in sales and marketing roles before moving to San Francisco to work full time at Adobe.

Out of all of your experience, what do you think best prepared you for your current role?

Playing sports throughout my life. Through sports you learn that the so-called little things are actually very important. Watching just ten more minutes of film on an opponent every day can lead to you making the game winning play. In my current role, I focus most of my time on sales and product management. Both require daily, very detailed focus. Over time, the constant repetitive tasks, like talking to users, ultimately will lead to us creating a game changing company.

Going back to the first day of working on your startup, what advice would you give yourself?

It's a marathon full of sprints. Often I hear the two separated. But, in my experiences, things have gone well when I shift my mindset to realize that everyday is a mini sprint within a long marathon. This keeps me on my toes, while also realizing that in order to sprint the next day, I need to recover and take care of myself. I don't always succeed, but I'm my best when I'm in this state of mind.

What entrepreneurial lesson took you the longest to learn?

Sleep is a superpower. I used to think that it was cool to say that I stayed up all night doing something, but now I've realized that the diminishing returns aren't worth it and that it's immature to devalue sleep.

What constitutes success for you, personally?

I like to break down my life into the eight dimensions of wellness. Emotional, Physical, Social, Occupational, Financial, Environmental, Spiritual, and Intellectual. I feel successful when I'm actively improving each dimension.

Do you have any insights that you want to share with the next generation of Alchemist Accelerator founders?

Team matters. Make sure that you are going on the mission with the right team.

Do you have any insights for the next generation of entrepreneurs who are specifically working in your space?

There's a ton of work to be done, so there's no need to follow another company's trail.

About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

Vinod Khosla: Building your Initial Team 1

Vinod Khosla is the founder of Khosla Ventures, a Silicon Valley venture capital firm. His firm invests in experimental technologies such as biomedicine and robotics. Khosla cofounded computer hardware firm Sun Microsystems in 1982 with Andy Bechtolsheim, Bill Joy and Scott McNealy. He spent 18 years at venture capital firm Kleiner Perkins Caufield & Byers (now called Kleiner Perkins) before launching his own fund.

If you had to pick the single most common mistake that young startups make, what would it be?

Let me explain the process of building a big company, assuming that's the goal. It's like you’re trying to climb Mount Everest, but nobody ever got to the top of Mount Everest without going to Basecamp first, and then camp one, camp two, camp three. The other thing you notice; you look at the route to Mount Everest and it is not a straight line. I always say “be obstinate about your wishes, be flexible about your tactics”. Tactics are about zigging and zagging, but vision is about where you want to get to.

What if the vision is wrong?

You can adjust the vision along the way. That happens often. Here's the single biggest problem: a company doesn't depend on the plan you make. A company becomes the people you’ve hired, not the plan you make. This is hard to believe, but almost always true. I think the first 10 or 15 people you hire dramatically changes the probability of what you become. 

People don't think in these terms. The hard part, in this way related to Mount Everest, is getting to the base camp where the first few zigs and zags are very tactical. You might say, let me just hire a coder or somebody who can call customers and do sales. But once you have enough of those people, you may not have the team to go after the vision. So this split personality between worrying about the vision, worrying about the day to day tactics, and hiring for both is the single largest mistake I’ve seen.

We were just talking about a company that started about six months ago. They have hired five or six people. The first five people they've hired are low-level technical people who are there just to get the tasks done. I actually don't think they'll be able to hire the people they need for the bigger vision because people on the outside look at who they will be joining. It's really the hardest decision to make: how practical to be, how strategic to be. I always say, in hiring, be strategic with people who can be tactical because they can do a lot more when the time comes. It’s okay if they can just call for me, or do customer support for a while. After getting past the first few zig-zags, these are the people that will help build the company’s vision.

The right personality is in people who know they can do a lot more, know the vision, are into the vision, but are willing to do everything. So all of you probably recognize that characteristic, but the implications of hiring the wrong, tactical-only people comes two years later, three years later, because you can’t hire the people you need for the life vision, and because you can't scale. Everybody knows what to hire in a VP of engineering or a VP of marketing. The question I always ask is, this VP of engineering you’re hiring, will he or she make your VP of marketing better? 

Nobody asks that question, but it is the single most important question I ask. What kind of questions would you ask the marketing person? The VP of engineering may not know what makes a great marketing person, probably doesn't, but knows the right kinds of questions to ask. He’ll tell you a lot about the VP of engineering operating outside their domain, and also how they might add to this evolution of strategy of the company, which is what we are referring to.   

Do you have some advice about how to build up a quality enterprise sales team?

Yes. On our website, there are two documents I'd suggest companies at this stage absolutely look at One is called ‘’Team Building,’’ and the other one is called ‘’Gene pool engineering for entrepreneurs’’. Unlikely you’ll just be asked about hiring great people, which anybody can tell you, but it's not actionable, because I don't know of anybody who says they try and hire not-great people. It is specifically thinking about what your risks are and how your engineered gene pool is, who you're hiring to go after your risks. Those two documents are worth looking at. 

Then I would say, hiring each functional person is very different. Actually, sales is much easier to hire and fire than marketing. Here's the reason why. A salesperson is a very tactical person, and the best sales guys don't want high salary, they want high commission. If they don't meet their quota, you don't pay them. If they do meet their quota, you're happy to pay them a lot. 

In the early days of Sun, all the sales guys always made more money than anybody else in the company, because they were animals and you just want them to be that. If they weren’t, they left because they had very low base salaries. These people would do much better at IBM or DEC, because they had a high base and low commission. We purposefully made it very low base and high commission. The best guys had so much confidence in themselves. They’re just self-selected.  

Is it really that easy? You just change the comp and then suddenly you have a team full of winners?

Yes, comp works for sales people. Marketing is different, we can’t do that, we need much more cerebral people, who think more deeply about the short term and the long term. That's much harder. Marketing is harder than just about any other function. If you call somebody at Google, and say, ‘’Hey, you’re VP of Marketing for YouTube or something, help me recruit this person,’’ they don't have a clue on how to hire a marketing person for a startup. Here's why, what marketing people do mostly is make what I call maintenance marketing. You're selling widgets, you’re selling trucks, you're selling cars, you're selling clothes. 

What marketing people do is incremental. Everything is defined. The marketing people are essentially doing maintenance marketing. An ad campaign here, a press release there. What startups have to do is figure out from scratch what's a new way to sell, what's the new positioning for them. It's like starting from ground zero. So startup marketing people have to be almost experimentalists in every sense of the word, clever and out-of-the-box thinkers. 

Those are not the characteristics in bigger companies, where people have done marketing for an established product. It’s so different than marketing for a startup, where you're trying to find leverage, you're trying to find a new product market fit. In fact, that evolutionary product design, like, oh, we're doing this, but this thing looks incredible, let's just try that. That's where products evolve in startups and good marketing people are that agile. They don't have long term marketing plans; they don't have PR agencies. Any startup that wants to hire an agency is generally a bad sign. I hate startups hiring agencies because it means they don't understand their product. 

If not agencies, where do you find these mythical people?

They’re usually in other startups. But sometimes, you'll find engineers in your own organizations who are just asking great questions. I find really good startup marketing people are just people who think from first principles, as opposed to people who think from tradition, like this is how press releases are done, this is how ad campaigns are done. Good marketing people are first principles thinkers. Generally, one of the other mistakes is to say, if you're selling retail, let's find somebody from retail. 

When I have to choose between domain expertise and better thinking, I’ve always picked better thinking for that function. Interestingly for CFO, I picked domain expertise, because their job is much more linear. So my point is, sales is different than marketing is different than finance. Each one requires you to have this art of saying what's the right way to think about this person. In these papers, I actually define if you're hiring for a position that you've never worked in, how do you go about hiring. You should read this. They’re on our website for a reason. Meant to be a resource to all entrepreneurs, whether in our portfolio or not.

About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.


An Interview with Gabor Angeli, Co-Founder & CTO, Eloquent Labs


Gabor graduated from UC Berkeley with a BS (with honors) in EECS. He then went on to pursue a Ph.D. at Stanford. During that time, he was the NLP Architect at Baarzo (acq by GOOG, 2014). He is also a core contributor to the popular Stanford CoreNLP toolkit. In 2016, he co-founded Eloquent Labs, a conversational AI company, with a fellow Stanford NLP researcher Keenon Werling. He Served as Eloquent Labs’ CTO until it was acquired by Square in 2019. He now leads the Conversations team at Square to bring cutting edge conversational AI to small businesses.

What did Eloquent labs bring to the marketplace, that wasn't already prevalent? What is the unique selling point of Eloquent labs as compared to other B2B NLP startups? 

One way to characterize our unique insight is that there are a bunch of ChatBots that either answer questions, like static question answering, or are otherwise integrated with a small set of APIs. From our experience, talking to customers and deploying our ChatBot, this was not how most query streams look. Take even something simple like a shipping company: tracking a package, everyone says, is the most common query that people have. But if you look through and figure out how a bot or human would solve all of these queries, it breaks down into 100 different smaller API endpoints or smaller things that you have to do. For example, questions such as “You’re stuck in customs, why do I have to pay duties?” “You delivered to the wrong address”, so on and so forth. They all show up in conversations that customer service categorizes as tracking the package. 

Eloquent Labs’ big contribution was a way to quickly incorporate new intents into the ChatBot in a way that didn't require manual effort to integrate with the associated APIs. The end result was a ChatBot that took less time to program for a new intent than it would have for an agent to perform the task themselves.

What was your motivation while building up Eloquent Labs? What was your drive that got you in the NLP space? What was pushing you forward?

What caused me to do a startup in the NLP space is straightforward. I did my PhD in NLP. That was the unique set of skills that I could offer to the world. 

Why Eloquent labs and why ChatBots? I had just graduated from my PhD, and my co-founder had done research in the lab that I was in as well. What we were good at was building high performance, accurate NLP systems. We looked around in the market for a place where that would be an actual advantage, a place where the technology was hard enough that we have a competitive edge, but not so hard that it's impossible. We created Eloquent out of that philosophy.

What made you transition from research to entrepreneurship? Did you have other entrepreneurial experiences before starting Eloquent labs, or was it the first time you really went into this space?

This was my first startup and first real experienced entrepreneurship. I worked as a fellow at XSeed capital, which was a wonderful experience and one that I'd recommend to anyone that has the time during their PhD. That gave me a bit of a sense of what the VC climate was like, what fundraising looks like, and how these people that have been involved in entrepreneurship and startups for decades look at the space and evaluate companies. 

How did you assign roles to each co-founder? How did you distribute the work amongst yourselves?

We fought over who would get to be CTO, and I won. We're both technical people. So in a sense, we’re both on the technical side. On the other hand, Keenon has much more of a talent for talking to people and communicating the vision for the company.

What is the most challenging thing you faced at Eloquent Labs?

There's a bunch of little, medium, and large challenges that are very specific to us or businesses like ours, but I’ll answer broadly. The most useful answer I can give to someone thinking about starting a startup is the most challenging bit was operating under uncertainty. There's a bunch of different types of uncertainty, but the one I’ll highlight is product uncertainty.

Everyone gives the advice that you should talk to a lot of people, hundreds of people. What they don't tell you is that you can talk to as many people as you want, you're still not going to get a clear picture of the world. You get little snippets of truth; you get little ideas of what might be, but it's very hard to run even just a single interview in a way that people give their honest impression, and aggregating on top of it is even harder.

That leads to this perpetual challenge. In a startup, it's never okay to sit still, because if you sit still, you're just going to die. The default state, if you don't do anything, you run out of money and collapse. So you have to go in some direction or another, and you just never know enough to be confident that that's the right or the wrong decision.

What constitutes success for you, personally? What drives you in the startup sense?

Keenon has a lot of family friends that are in business and successful in business. He was asking for advice from some of them, and retelling the woes of Silicon Valley and all the weird perverse incentives of fundraising and hiring and so forth. He recounted advice he got from one of his family friends, ‘Look, businesses aren't hard, you have one job, bring in more money than you spend.’’ That stuck with me throughout the remainder of the startup and even now, as very sensible criteria for a successful company. Success in the startup is you bring in more money than you spend.

There’s many other ways to have strange, perverse Silicon Valley success. One of them is getting acquired. You can go after users and go after mega growth. But these are all anomalies in a sense. The core truth remains that if you're looking at what makes a successful long term company either now or sometime in the future, you should be bringing in more money than you spend.

What was the most valuable thing you learned from the Alchemist experience?

At a high level, the role that Alchemist played in our particular startup venture was to get us exposed to the business side of things. We had very little experience about what the components of running the actual sales and marketing and business development side of the company is. Alchemist actually focuses a fair amount, in both their classes and their mentorship, on precisely this. It was useful to hear a bunch of different perspectives from the meetings and presentations that they gave. It was especially useful to get one on one mentoring from the various Alchemist mentors that they paired us up with. 

Do you have any advice for the next generation of Alchemist Accelerator founders?

Don't start a startup. It's very painful. Most people aren't going to listen to that and they're going to do it anyways. That's good. That shows some amount of determination. If there's doubt there, and I can dissuade you, then you shouldn't be doing a startup. I got the same advice once about getting a PhD. They told me, don't do a PhD, and tried to persuade me otherwise. The motivation is the same. If someone can be persuaded out of it, then it's not going to go well. It's a very painful experience and much more painful than its portrayed in the media and by VCs and in the general culture of Silicon Valley. 

Do you have any plans of getting back into the startup space in the future? Or, would you like to continue developing your technology at Square?

No, I’m not likely to return to the startup scene.

That’s because of what you said; because it's very painful? Or, is there some other reason?

Mostly that. There are more interesting places to do interesting work than at a startup. As a technologist, startups are -- contrary to my initial impression -- not the most impactful way to bring new technology into the world. It's a wonderful way to bring existing technology to a larger group of people. But if the interest is to build something new, to build something creative, to start something from scratch: startups, by virtue have all of these extra pressures being put on them, are not actually a particularly effective way to do this. 

If you had to do this entire startup journey once again, what would you do differently than you did the first time? What were the biggest mistakes you made while you were working on it?

A ton of mistakes were made. A few things I could have done differently. It's difficult to do a startup that is both developing new technology and trying to bring in substantial revenue. We tried to both develop something that was, in a sense, new to the world: conversational AI. At the same time, we were trying to monetize it and get actual customers and fulfill this criteria of success, of bringing in more money than you spend. Doing both at the same time at a high level is very difficult and adds extra burden to the startup.

In practice, there are plenty of successful companies that develop new technology, and then wait to get absorbed into a big company to productize it. There are also plenty of successful companies that take the technology that's new or underutilized or utilized in an adjacent field that can be applied to something else, productize it and become a self-sustaining company. Many of these actually go on to have research links or research and development engineering arms, that then develop new technology. However, to do both of these together was probably a high level strategic mistake in Eloquent.

About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

An Interview with Nikolaus Volk, Co-Founder, KYTE

Team KYTE: Ludwig Schoenack, Nikolaus Volk, Francesco Wiedemann

Nikolaus graduated from Technische Universität München with a BSc. in Engineering Science. He then went on to pursue a MSc. in Engineering at Stanford University. He worked at Uber as a machine learning engineer, where he built large scale (ML) systems and infrastructure on top of sensor and location data. In 2019, he co-founded KYTE with Francesco Wiedemann and Ludwig Schoenack, where he serves as the Technical Leader.

What does KYTE bring to the marketplace that wasn't already prevalent?

We allow customers to rent a car for a day, a couple of days or weeks. We're completely redefining the experience of how people rent vehicles. For our customers, we make renting a car as easy as ordering an Uber just with the press of a button because the car comes straight to your door.

KYTE doesn't really define itself as a car-sharing or car-rental company, since you don't own the cars. How does your model work?

Yes, that's correct. We are a technology and logistics platform. We virtualize the supply from car-rental companies, dealerships or directly from auto manufacturers. We work with these fleet professionals because they are really good in what they are doing with respect to buying and selling vehicles. And we are building what we are good at: customer experience, distribution, technology, product etc. For our suppliers we are building what we call cloud-fleet infrastructure to make these vehicles then easily deployable to any demand.

Can you tell us about your journey before starting KYTE? What was your motivation for building up KYTE? 

We have been observing a lot of what's going on in this space. The three of us realized that ride-hailing has developed over the last couple of years, scooters have transformed micro-mobility, and the car-rental space, in our opinion, was the last missing piece of the entire mobility landscape, where we identified a large gap in terms of a) user and product experience and b) supplier needs.

Personally, I used to work for Uber as a machine learning engineer for a couple of years. I was always really fascinated in dealing with the physical and the digital world, how to basically make the physical world smarter, more intelligent and more efficient. At Uber we called that working with  “Bits and Atoms”. And my two co-founders were also in the transportation space: Francesco on the product side for BMW, he was developing mobility experiences for the end consumer. And Ludwig developed large automotive strategies as a consultant for McKinsey.

How did you meet your other co-founders?                              

Francesco and I met during undergrad study together. We have known each other for more than 10 years now. Ludwig and I met through his (now) wife a couple of years ago in San Francisco and pretty quickly concluded we can (and should) build a company in this space together. The three of us are all German, so that’s another common factor I guess.

How did you assign roles to each co-founder? How did you distribute the work amongst yourselves?

We are very lucky that we all have very different and complementing skill sets while shill sharing the same traits and principles for running and building a company - I think this is very rare. In general, when building a team and assigning roles, it always comes down to maximizing value for the company and ensuring that everyone can bring in their best side to the table. It is important to have very clear functional titles, not in terms of C-level or hierarchy, but more in terms of ownership or responsibilities. All three of us have very different skills and backgrounds. Francesco has great product intuition and understands the user’s perspective. He is the natural product lead. I am much more a tech person with a focus on software, backend, optimization and analytics. I love running highly efficient technology teams. Ludwig, given his consulting background, his MBA, his ability to understand people and find best possible business outcomes is the perfect fit to run both the operational side of the business and to deal with all of our suppliers, which are essentially the engine of our business.

What do you think, out of all your experiences, has prepared you the best for your current role in the company?

The high speed at Uber is definitely one of the biggest influencers for me, and also for us. What I mean by that is the capability or drive and push the needle and move incredibly fast and aggressive. Just by having this mindset in terms of how to build things and how to scale, we think we can actually capture market share very quickly. But for obvious reasons we all bring very unique and valuable skill sets and experiences to the table that in sum define how we run the company.

What is the most challenging thing you’ve faced at KYTE so far?

I think it's keeping the focus on a few things to work on. It’s so easy to get distracted because there are always 500,000 things that we could work on all the time. We have tons of ideas, and there are all these different directions that we could explore, and that could all make sense, but given limited resources and limited capital, we really need to keep the focus. It's by far the most challenging thing, but I think in probably any startup and this is not particular to us.

What do you think is going to be the biggest challenge for you at KYTE? What is the one bottleneck that you're trying to fix right now to get to your maximum potential?

At scale, in order to ensure scalable and massive vehicle supply will require hard work, really hard Business Development and superior technology and excellent performance. On the other side, for right now, we’re a consumer facing company, which means there's an entire consumer marketing side to it. Really nailing the product-channel-market fit, i.e. which customers we acquire via which channels with what specific messages and value propositions, and the specific channel mix that is scalable is hard, but probably for any consumer startup.

What made you transition from an engineering role or from other roles that you could have gotten straight out of academia to build a startup?

I was always somebody who wanted to build and ship things very quickly. Kyte gives me the chance to actually have real impact, ship tangible products and go with a pace which is impossible in a bigger organization.

What would be the most valuable thing you learned at Alchemist? How was your experience there generally?

The most fruitful experiences always had to do with the people at Alchemist. Looking back, the level of how Ravi, Ash, Danielle and the rest of  the crew helped us push through the tough times. They also had a lot of patience with us. We essentially created the company within Alchemist. They were amongst the first believers and amongst the people who motivated us, gave us energy and spread the love for Kyte. Another thing to highlight is the advisors there. I am sure they did a great job with all the companies, but I feel like particularly for us, a bunch of the Alchemist advisors had a very significant impact on the company. We are very grateful for them.

For future Alchemist accelerator batches, what would you have done differently in order to maximize what you’ve gained out of Alchemist?

We definitely gained a lot. However, if we could do something differently we’d probably be even more thoughtful about how we choose advisors and how we worked with them. We could have tried to better understand how they could have an impact, and then how to best utilize them to get the most value from our time with them.

What entrepreneurial lesson took you the longest to learn or you're still learning? What would you say is the best advice you've gotten regarding entrepreneurship that you've taken and implemented?

It goes back to what I said before, you always have to force yourself to keep the focus and not get distracted. This is across the board. I would say this is something which I still need to remind myself of every day.

Another thing that is important is to learn to communicate the confidence in yourself, the team, your company, and your product when you go out there and pitch advisors, investors or candidates. It takes some time to be good in switching quickly from “problem solving” mode (when you need to be critical, challenge your assumptions and reflect) to “selling mode” as we always call it, but it's very necessary. 

One more thing to add is the power of story. That probably gets underrated or undervalued a lot. The story is such a powerful thing in general. The story needs to be something that you really believe in and then you need to go out and convince others that you can make this story happen. The best stories are the ones where people first don’t believe it’s possible but then you convince them that you are the one that is gonna make it actually happen.

What constitutes success for you in the center of the startup? What would you consider to be a successful outcome and how would you determine that?

First of all, the center of the startup are obviously the people, the entire team. I strongly believe in the people first, then products, then profits hierarchy. And for us as a team, success means creating value in some way. A successful outcome is building a massive company (or at least having the continuous ambition to do so and building something that has the potential to be massive).

Do you have any insights that you want to share to the next generation of founders?

First, focus on the problem and then build a business out of that. Do not put too much focus on fundraising early on. That will come naturally if you put the right attention on the problem, the product and team at the beginning. If you do join Alchemist, make sure to involve the Alchemist crew to a fair degree early on as that definitely helped us tremendously. Also mingle and spend time with the broader Alchemist community, your current batch and other batches. It’s quite a powerful family and network when you know you are going through this together and help each other out.

Do you have any insights regarding the mobility landscape?

It’s an all-or-nothing kind of market. It's highly competitive, and has gotten very hyped over the last couple of years. However, the beautiful thing about that market, about transportation in general, is still: if you get it right, it can be really massive.


About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.


“From the Courtroom to the Conference Room” An interview with Mike Burshteyn, CEO, CryptoMove

As CryptoMove's Founder & CEO, Mike Burshteyn drives all company business strategy and execution. Before starting CryptoMove with his father, Boris, Mike was a cybercrime and data protection attorney. At Perkins Coie he worked with leading technology companies like Google, Uber, Amazon, and Microsoft, as well as startups in hypergrowth, on data privacy, security, intellectual property, and computer crimes. Mike was the #1 ranked college debater in America at UC Berkeley.

What does CryptoMove bring to the marketplace?

CryptoMove protects data with continuous fragmentation and moving target defense. Current data protection methods leave sensitive data, keys, and secrets as an easy stationary target at rest. CryptoMove’s key vault product is all about protecting authentication tokens, API keys, application secrets, SSH keys for cloud services, and secrets for containers and Kubernetes. Developers who do cloud native development or use cloud services, today, find it difficult to manage keys and secrets at scale. CryptoMove has this revolutionary technology that can help to solve those challenges.

If you're working with cloud services, if you're working with containers, an effective secrets management tool like CryptoMove can increase your speed of development, make life easier for developers, and also provide additional security.

What was your motivation while building up CryptoMove? What was your drive pushing you forward?

It all started with my co-founder and our CTO, Boris. He invented this technology. For decades during his career he was building distributed systems and he was always thinking about how to do that more efficiently and more effectively. Thinking about the question of “what happens if encryption fails” led Boris to developing CryptoMove. When he needed a business partner, that's when I ended up quitting my job and joining in. By the way, we are a family business — my co-founder is actually my dad. TL;DR: my dad invented this technology and needed help with the business so I jumped in.

What do you think is the most challenging thing you're facing at CryptoMove?

That's a great question. There are so many challenges with a startup all the time. I think that right now the biggest challenge that we are facing is this idea of how do you scale the organization. We've been experiencing a lot of growth: new customers, new users, new team members. Every time that you experience significant growth in the company it seems like everything has to get rebuilt in terms of the processes, whatever everyone is working on and whatever everyone is focused on. Being able to do that rapidly and in a way that maintains a really high standard for execution is a big challenge.

Can you tell me a little more about your background before starting CryptoMove?

I grew up in the Bay Area and my parents are both software engineers. They used to work at all kinds of startups and tech companies. When the dot-com bubble burst, I remember asking my parents “where did the traffic go?” because all the roads cleared up. So, I kind of grew up around tech. I ended up in college at Cal - most of my time was spent on the debate team,  where we were ranked number one in America. We would research all sorts of different topics and actually one of the things that I researched quite heavily was cybersecurity and data protection. After college, I ended up working at a startup. It was a great opportunity to learn a little bit about all the different ups and downs and parts of the startup, and I ended up starting my own ecommerce business focused on debate research for students, which was fun.

Soon after college, I ended up going to law school and became an attorney. As a lawyer, I ended up in this practice group at Perkins Coie doing data security, cyber crime, intellectual property, litigation, and privacy. We were working for technology companies, startups, big ones, small ones. I had a lot of exposure to cleaning up messes, such as API keys improperly checked into GitHub. Now, coincidentally, CryptoMove’s product is meant to avoid that. Meanwhile, my dad was working on CryptoMove in stealth, prototyping it. We were helping with the patents and standard legal work. What he really needed, though, was a business partner. So I went to my bosses at the law firm and they encouraged me to take the leap. That was about 3 years ago.

Out of all of your experience, what do you think best prepared you for your current role?

I don't necessarily think any one thing prepared me. Frankly, every day and every challenge we encounter is something new and unique. It’s all about being flexible. My approach is generally to try to learn as much as possible from people around me. There seem to be a lot of startups where founders knew they wanted to start a company and they took a very deliberate path towards doing that. In the case of CryptoMove, it kind of just happened and wasn’t necessarily our plan. We're just trying to do the best we can, taking advantage of opportunities.

Going back to the first day of working on your startup, what advice would you give yourself?

Apply to the Alchemist Accelerator, which we actually did. Not on the first day, but a couple weeks afterward. I would definitely do that again. I would just try to iterate as rapidly as possible. I think that's something that I would say could benefit any startup. Create a hypothesis, test it quickly, and iterate and move on. CryptoMove today, our product, our go to market strategy, everything about the company, could not have been predicted 3 years ago. It took a process of rapid iteration. That’s been really important.

What was the most valuable thing you learned from Alchemist?

Alchemist was huge for CryptoMove and for a lot of companies in our class. We were first time founders and even though we had a lot of startup experience, we had never raised VC funding. Alchemist set us up for our first investor, Tim Draper and Draper Associates. We met at an Alchemist Investor Feedback Summit. Alchemist set us up with our first customer, which was the Department of Homeland Security via a scouting program they had, that led them to look at Alchemist start ups. Just working with Danielle, Ravi, Ash, and everyone helped give us the building blocks of the common pitfalls that you face in a startup. Even now, Danielle is an observer on our board. We have continued to work closely with Alchemist. Across the board it was really valuable to us.

If you could do Alchemist again what would you do differently?

I think that there are things that we did while we were in Alchemist that in retrospect we shouldn’t have done. For instance, we spent a lot of time going to a bunch of pitch events with corporations. In some cases they were helpful but there is a lot of corporate innovation tourism that is easy to get sucked into. When we were working on our product and asking users for feedback, that was the most valuable thing. In many cases, corporate innovation teams are just cycling through Silicon Valley almost like they are at a zoo. It’s a common pitfall for a startup, especially at that early stage. When you meet with big companies you think you can get a big contract with them, but in reality they’re just enjoying the scenery and taking some notes on startups. Alchemist calls this “corporate tourism.” Just to take note of what really qualifies a lead and whether there is corporate innovation tourism going on can save a lot of wasted cycles.

What entrepreneurial lesson took you the longest to learn or are still learning?

I think that there are different lessons for different people. For me one of the biggest adjustments I’ve had to make is that in a startup there are ups and downs every single day. Especially as the company gets bigger, you could have massive wins in one area and fires in another area happening simultaneously. You can’t ride that emotional rollercoaster. Also, since I was a lawyer and I was a litigator, I was doing a very specific type of work that required being extremely aggressive, either defending client interests or going after cyber criminals. There’s a shift in style. There definitely was an adjustment period. I can’t write long emails anymore and definitely don’t check all my punctuation. Obviously, you can’t negotiate a business deal the same way you negotiate a settlement in a lawsuit.

What constitutes success for you, personally?

For me, for my co-founder, and I think, for everyone at work, success at CryptoMove means different things for different people. But, we all are excited about what we’re doing, about building a new product from scratch. Take CryptoMove’s technology, this idea of moving target defense and moving target data protection, which no one has ever heard of before. People think it's crazy when they first hear about it. We’ve got this really innovative technology, patented globally, that is really changing how organizations such as our government and military protects its data. That is exciting. In some ways success is being able to do it for another day, because it means we’re growing. Startups are always on a fixed timeline. There's a runway. You're always trying to get to that next level. As long as we can wake up and keep doing it, we know that we're succeeding.

Do you have any insights that you want to share to the next generation of Alchemist Accelerator founders?

It is really great to take advantage of the Alchemist network. There are people with expertise in different areas and you can fast forward a bunch of learning by engaging with the right people. At the same time, you have to really be careful about applying advice to the specific context of your business. I think that there's so many resources, especially in the Alchemist network that can be leveraged.

Do you have any insights for the next generation of entrepreneurs who are specifically manipulating and working with data?

When it comes to data, in the security space and for security startups, it's such a crowded (and overfunded) market that it can difficult to stand out. We've done certain things, like making our product SaaS first. We really focus on our users, which are developers, devops people, security engineers, rather than just trying to sell to IT managers. It’s a very different approach than what you'll see with most security startups. In today and tomorrow’s worlds, data may very well become the most important resource—as impactful and as distributed as oil. Given this, CryptoMove’s data protection innovation via fragmentation and continuous movement and mutation is vital.

About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley — including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

“Understanding What it Means to be a Passionate Founder”: An Interview With Derek Chau, Partner, Acorn Pacific Ventures

Over his career, Derek has been involved in over $3.5B of private and public company acquisitions. Prior to Acorn Pacific, he was the co-founder of a machine learning company in the news aggregation space and also served as the COO of a leading-edge government software company. He is a CFA charterholder and also actively mentors companies in the Dartmouth and Harvard alumni networks.

Can you tell me about your background?

I was an executive at a couple of software companies ranging from a 300-400 person enterprise software company, down to a startup level software company. Prior to that I was mostly in corporate finance.

Out of all your experience, what do you think best prepared you for your role in Venture Capital?

I served a lot of senior level operations, seeing--for a lack of better words--a lot of blocking and tackling. Dealing with a lot of headaches on the operational level really prepares you to understand what it takes to scale a company. I also had some experience operating a very small startup, working with my own team, bringing everything together, and raising capital.

Can you tell me more about Acorn? What is the approximate size of your fund? How much do you normally invest?

Acorn is a network of funds. Acorn Pacific Ventures is the fund with myself and three other partners.

Acorn was founded about 18-19 years ago as one of the first Chinese Americans funds here in the Valley, funded by a number of very successful Chinese American entrepreneurs in industry. They banded together with the vision to give back to the community, investing in founders and supporting that ecosystem.

Over time that morphed into a series of funds. Acorn Pacific is the forefront here in the valley. There are a couple funds in Taiwan and one in Shanghai, and a partner fund in Singapore. Between that ecosystem, we invest in founders and in their vision. We also look for companies that over time have an international component and can leverage our cross border experience. Things like optimizing supply chains and technology transfer.

How does your fund differ from other funds?

There are two main factors. Whereas a lot of funds have good operational people, at Acorn we  bring together all of our operational teams. From the very first founders, it is a requirement that we bring in people who have seen it from a variety of standpoints. Everything from robotics to supply chain optimization to software.

We look for people who've been through it and have got battle scars. People who understand how it works and are very sympathetic to founders, understanding what it's like to raise capital and scale a company. Understand what it’s like to go through the good times and the bad times.

Can you tell me about how you make decisions in investments?

We try not to be overly formal. We don't run traditional investment communities. Rather, we want people to meet people. So, the operating partners and GPs at Acorn want to work with folks. We want you to meet the folks who are going to be helpful and who are going to be working day to day with you.

As those conversations go over time and people become more comfortable, we run through our diligence. That is our process. We of course make unanimous decisions about the partnership. Once we are invested we get behind the company, working through the good times and bad.

How do you deal with cold calls and e-mails? Do you have any advice for entrepreneurs trying to reach out to the VCs?

It’s very very hard. We don't put a lot of weight on them. We're not trying to exclude cold emails and cold calls, but it's very difficult to get our attention. It’s not a deal that's introduced by someone in our broad network, which can be very broad. We're not going to give it a lot of weight unfortunately. By chance you may get our attention and may get a response but it's pretty rare.

What's the number one red flag you see that makes you pass on investment?

There's a lot of flags that we look for. A team dynamic is really important to us. First and foremost we invest in people. If we see that the team of founders or co-founders are not gelling or there’s some dynamic that’s missing there or if the team is not cohesive, that’s big flag for us. If we feel the technology is something we don't feel that there's much defensibility in, that’s another piece that could also raise a lot of questions. I don't think there's ever just one flag so to speak.

Can you tell me more about your investment in MetaData with Gil?

We met Gil probably a couple of years ago, and at that point the company was still very young. First and foremost I liked Gil. He had very good passion when he spoke. The market he is in is a very crowded space. It’s one that I traditionally did not spend a lot of time in, but there was something that was interesting about Gil.

After the first meeting, we continued to keep in touch. He did what he said he would do in terms of delivering, in terms of top line, in terms of product, and customer traction. Transparency was really important to us and and Gil was super transparent. When we talked, we could tell he had a lot of candor and things clicked. We could also tell he cared very much about making the best out of his company and also being successful for his investors. The fit was there in terms of the people.

How do you identify passion in entrepreneurs?

It's hard to boil it down to a few characteristics. The advice I give to all founders is to be true to yourself. If you’re not true to yourself, we can see through that. If it’s not something you are passionate about it’s, for a lack of a better word, fake. Obviously.

In Gil’s case, he was in an industry he spent a lot of time in. That's a good sign for us. He came from a frustration with this space and he saw an opportunity to make things better. Gil’s case is just one. We can tell even though he's been at a few different companies, he was very passionate about making sure he would succeed. He was hungry.

What do you find difficult about seed stage investing?

Startups are hard. Anyone who has done it knows that. It's easy to, after the fact, describe how everything went right, but we all know it's so non-linear. There's so many things that can go wrong. Everything from product market fit to technology to the team. It’s just pure luck.

For us there’s never just one thing. There’s so many reasons that a company can fail, even if a company has all the right people and execution. There's no perfect investment. For us it's very much an art and it’s really going with your gut.

Would you be more likely to fund a very experienced team with a mediocre idea or a novice team with an amazing idea?

Every situation we come across is different. It’s really hard to boil it down to such simple terms. If I had to give an answer, I would say that The Valley is full of ideas. There’s not a lack of ideas, but it’s more about the ability to execute. Operational experience counts for a lot.

Is there any one piece of advice you want to give to founders that doesn’t get shared enough?

Be true to yourself and be humble. I think humility is a really important skill that we really value at Acorn. Rejection is hard and it requires endurance and perseverance. It’s not an easy thing to do. We've done it and understand it. It’s hard to look around you see all these other startups that are getting so much money and valuations, but they’re the exceptions. If you’re having trouble raising money, just keep at it, believe in yourself, believe in your team.

About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley — including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

Learn how to grow your startup with Sean Ellis, the “Father” of Growth Hacking

If you’re looking for experts that can advise you on when and how to scale your startup, Sean Ellis should be one of your first calls. Sean coined the term “growth hacker” in 2010, after helping companies like Dropbox, Eventbrite, LogMeIn, and Lookout achieve breakout success and billion-dollar plus valuations.

Today, he’s the Chief Evangelist at GrowthHackers, a company he founded in 2016 to “help teams work together to drive breakout growth results for ‘must have’ products and services.” During the summer of 2012, Sean spoke at Alchemist and distilled some of his most valuable insights around product-market fit and developing strategies for growth. His advice provides a significant and preliminary roadmap for early-stage founders, as they look to take the next steps with their startups. Sean shared insights across several different, critical areas.

Product-market fit is important…but what exactly does it mean?

For every startup, finding “product-market fit” is a critical early inflection point. Sean notes that Marc Andreessen, founder of a16z, and one of the first people to coin the term, emphasized that founders should be obsessive in pursuing this state. Andreessen sees it as so make-or-break that every business can be categorized in a binary manner, as either “pre” or “post” product-market fit.

Despite its importance, Sean observes that a metric-based, universal definition of product-market fit has proven elusive. Through his operating experience, Sean has developed a potential solution to this “mystery.” Put simply, companies need 40% of their users, within a large segment of their market, to be in a place where they’d be “very unhappy” without the product. That seems like a clean, elegant solution. But, what is a large segment of your market?

Sean has a few answers. First, you should look for some type of 40% cluster within your user base. Next, try to figure out whether that group is meaningful, or merely an edge case. For example, if 80% of men are really unhappy without your product, that’s meaningful. However, if 80% of men between the ages of 37-40 in Oakland are really unhappy without your product, that’s an edge case.

While definitions are a helpful starting point, there is limited utility in theory. Sean’s unique value comes from his experiences in helping companies achieve breakaway success. To reach product-market fit, he has a few key suggestions.

Have a concrete plan for growth.

  • Pain Point First: Find that there’s real frustration around the problem you’re solving, before you even write a single line of code.

  • Early Feedback: Release an MVP to get feedback on your product as early as possible.

  • Find Your “Must-Have” User: When you find this user, or group of users, who really need your product, learn as much as you can about them. Explore some of the following questions:

    • Why do they need your product?

    • How are they using it?

    • What’s the primary benefit they’re getting from using your product the way that they do?

Sean realizes that it’s tempting to find people who don’t like your product, so that you can try to improve and iterate. It makes sense, but he emphasizes that it won’t lead you to create consistent value. Instead, he advises that you discover everything you possibly can about your “must-have” users, and find out what makes their experience “must-have.” From there, you can start to identify must-have groups and execute on their needs, as they continue to engage with your product. Sean stresses that your product roadmap should be tailored to replicate the experience that’s been resonating so strongly with these must-have users.

Funnel optimization is critical, and it always pays off.

There are a few key skills that can help founders on their journey to product-market fit. According to Sean, funnel optimization might be the most important. He emphasizes that it’s necessary to analyze every point of the conversion funnel. This process can be frustrating, because users are typically unresponsive and unwilling to give meaningful feedback.

However, even if you’re frustrated, Sean says you can't give up or give in. Even a 1% response rate, with months of funnel analysis, can provide significant value. Sean explains that in one case, a company he worked with tripled their conversion rate with minor tweaks to messaging on their platform. Through survey results, they were able to see that users were unsure whether they were actually downloading a free version of their product. A minor tweak that more clearly distinguished between free and paid versions led to the 3X increase in conversion.

Know when to grow.

For most companies, there’s a lot of uncertainty around when and how to scale. Sean suggests that it’s optimal to spend and scale aggressively when you’ve reached the key 40% very unhappy stage, and when you have a positive ROI.

He also notes that, for freemium products, the free version is an excellent customer development channel for premium offerings. This testing ground lets them observe actual user behavior and see where there’s real value. He implores the audience to think about products in their lives that hooked them on their free versions, before getting paid subscriptions. For Sean, Skype was one of these products that quickly came to mind.

The network effects complication.

Toward the end of his talk, Sean makes a key distinction: there’s a big difference between traditional growth companies, and companies that rely on network effects. He asserts that, with network effects, it’s not possible to simulate the value of the company at critical mass, because it continually gets more valuable over time.

These companies don’t have the luxury of finding product-market fit, followed by optimization and growth – they must do all these things at once, which makes the process much more challenging.  

Key takeaways in 50 words or less.

Find people who really need your product and engage deeply with them. Optimize your sales process to increase conversion at every point of the funnel. Recognize that purely viral growth is not sustainable. There has to be a “must-have” experience underlying growth, or you won’t be able to retain users.


About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

“What do VCs value in founders?” An interview with Jean Kovacs, Partner at Hillsven Capital


Jean has more than 30 years’ experience directing technology companies, and delivering exceptional results with growing enterprises. She is currently president of the Northern California Chapter of the HBS Alumni Angels, a forum for Harvard alumni to connect with, learn about, and invest in quality early-stage companies. Her resumé includes serving as CEO and Co-Founder of Comergent Technologies, and Co-Founder and EVP of Qualix Group. She was named to the Silicon Valley/San Francisco Business Journal’s list of Most Influential Women in Business and has been profiled in Fortune, The Financial Times, Computerworld, Internet World, and InfoWorld. She holds an MBA from Harvard and a BS from Northeastern University.

Can you tell me a little more about your background before venture capital?

I worked for technology companies in marketing, product marketing, customer support, sales, applications engineering, and then went to get an MBA, thinking that I was going to go to Wall Street. I ended up deciding to come out to the west coast. I worked at Sun Microsystems, which went public, and then Frame Technology, which also went public. Following that, started a company (Qualix), which we took public, then started another company, which we sold to AT&T. I was always on the operations side until I got involved in angel investing. About two years ago I joined Hillsven as a Partner.

What do you look at when you're looking at a startup?

We typically focus on enterprise companies. We don't do a lot of marketing of our fund. We typically look for “curated deals”, deals that comes out of an accelerator that we trust or is referred to us by someone that we trust. We'll do two to three deals per year. We typically go in at Seed and lead the round. We put in anywhere from $500K-2M.

What about MetaData stood out from the rest of the investments you were thinking about making?

I should say that I was not with Hillsven when they invested in MetaData, so this is a little bit of hindsight on my part. One of the things we liked was that Gil started as an engineer then got his MBA and went on to be a CMO, so he actually lived the customers’ lives before he started the company. He had that domain expertise and could talk the CMO language. As he was being a CMO he was thinking, “Why hasn't anyone developed a product like this?”

We felt he had that unique combination of business experience, domain experience, and technical experience. That experience and vision, combined with energy and tenaciousness, were the right ingredients that lead him to start MetaData.

What are your thoughts on Alchemist?

I like the Alchemist team. They seem to have a higher bar for companies going in, which also results in a higher bar for companies who are exiting.

When I talk to entrepreneurs who have gone through the program, they all universally say that it was really worthwhile. There are a lot of incubators and accelerators. That makes for a lot of noise, but I would say Alchemist is certainly in the top percentile, based upon their results.

Is there anything you’re excited about in the future?

I just think there's a huge opportunity for what we do. We're seeing SaaS is leading to the democratization of the enterprise. No longer are business people in enterprises beholden to huge IT departments or huge ERP vendors so that everything has to go through. It's much more accepted now if you have an application that fits a need in an organization, to go ahead and get that and deploy it within your organization. It's an opportunity we're seeing for startups that we haven't seen for a very long time.

What do you think is the number one red flag that would make you pass on an investment?

We invest very early on. Our number one priority are the founder(s). If we don't feel good about the founder and the founding team we won’t invest no matter how hot the space is.

What makes a good founder?

First, it's someone who can articulate a problem and has domain expertise with that problem. Second, it’s someone who can attract and build a great team. Third, the founders and especially the CEO has to be tenacious. Probably less than 10 percent of the companies that get started have an easy route creating a product, bringing it to market and growing sales. There are always ups and downs, so we need to know that that entrepreneur is so passionate that they're going to forge ahead even when the going gets tough.

Would you be more likely to fund a very experienced team with a mediocre idea or a team of novices with an amazing idea?

It's about the quality of domain expertise and focus. If they're novice they have to be coachable, have energy, and be tenacious. We'd rather have someone come in and say, “I know this problem. Here's how you solve it and here's who I've talked to and here’s who I’ve sold to.” Having early traction in a company is really critical.

Which of your investments are you most proud of and why?

We’re proud of all of our investments!

Can you tell me about how you deal with cold emails and calls?

That’s a tough one. We’re so busy getting curated deals that it’s hard to answer cold emails/calls. We try to get to them, but they typically don’t get the attention that we give to curated deals.

Earlier you spoke about finding deals through references you trust. What makes a reliable reference?

In addition to a few accelerators we trust, we get deals from several sources:

1. Other investors who understand our model and know how we invest in and support our companies

2. Our CEO’s/Founders - They understand our model and we trust their insights.

3. Customers. We keep in touch with enterprises and are always talking to them about the problems they have. If they find a company who is young and helping them solve a problem, we want to talk to that company!

What separates Hillsven from other funds in the area?

We take a very active role. Typically, we lead the round, and always take a board seat. There are three partners here and we all have different skill sets. We’ve all been founders ourselves and our careers have been focused building companies, not just investing. We really spend time getting to know the company, and helping with what they need, whether they want to brainstorm on technical concepts or market fit.

When they’re getting ready to raise their Series A, we also spend time helping them and making introductions.

Bottom line: We view ourselves as partners with our investments, not solely as investors.

What do you feel like your role in the company is?

We’re there to support the CEO and the team. If the CEO comes in saying I'm really wrestling with this or that, we’ll pull in the right partner who can help. If we don't have a partner with experience in that specific area, we all have networks that we can reach out and find someone who knows a lot more about a specific area.

What you think is the biggest indicator of failure for a startup?

If I were to sum it up, I would say believing your own bullshit. Someone who pulls together a great pitch and says, “if we build this they will come” and not really having that tie into the market and customer prospects. When you look at Gil, he was a CMO and he knows the pain that they have. We have a company called Retail Zipline, another Alchemist company. The CEO of that came out of the retail space. She knows the pain. It really is having that passion where you say, “this is an issue that my team and I can fix, and it's a big opportunity.”

Is there any one piece of advice you would give founders that you think doesn't get shared enough?

Do your homework. Look at the VC’s web page, talk to their portfolio companies to figure out what they focus on, get your information all lined up. Then, have the tenacity to, in a nice way, keep on top of the process.

Can you tell me about your experience as a woman in Venture Capital and any advice you'd give to young entrepreneurs and investors?

I would say right now, it's a fantastic time to be a female in the venture and startup worlds. There's been so much awareness in the market, that I think people are really realizing the talent pool and are going above and beyond to access it.

Do you have any advice for mothers who are trying to grapple with motherhood and their career?

It's never going to be easy. One or the other is going to suffer and I think you just have to make peace with that. Sometimes you’re going to be more career-focused and sometimes you’re going to be more family-focused. I think as a mother you've got to just come to grips that you can't be all things to all people, all the time.

About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

An Interview with Arun Penmetsa, Partner, Storm Ventures

 Arun Penmetsa is a Partner at Storm Ventures and focuses on early-stage Enterprise software companies, primarily in SaaS, Security and Digital Health. He has extensive experience building enterprise software solutions at Oracle and Google. Arun is passionate about healthcare and using technology to improve outcomes and drive efficiency for patients, providers and payers. He is also an investor in several healthcare groups in India where he serves as an advisor on technology and population health. In his spare time, Arun enjoys spending time with family and hiking.

How did you get into the world of VC? Was it your first job?

No, to give you a little bit of background, I started out on the technology and engineering side. After college and graduate school, I worked at Google and Oracle, building enterprise products for about five years. Then I went to business school, and joined Storm Ventures right after that. It wasn’t my plan going into business school, but I got introduced into the world of venture capital (VC) when I met a lot of VC’s, mostly at startup conferences and other networking events. I was really curious, because one of the things I was trying to do in business school was to learn a lot more about other industries. I’d only worked for a few companies, so I was curious how the industry worked. I spent the summer between my two years of business school at Storm. I really enjoyed the work I did, and really enjoyed working with the Storm team, so I was happy to have the opportunity to come back full time.

Did you see yourself doing this, or being where you are today, when you graduated college?

When I graduated from college, and when I finished graduate school, I was thinking about a more tech-focused career. Like I said, I worked in engineering and product at Google and Oracle. I was trying to transition more into a startup environment, so no, I wasn’t really thinking about venture capital.

Why did you invest in 4me, the Alchemist company? What differentiated them from other investments you were thinking about at the time?

A couple of things. At Storm, we focus on enterprise software and spend a lot of time on industries that are not necessarily mainstream. So I was always interested in the service management space. Given the general level of innovation that had been happening, the service management space was lagging a bit compared to other industries, so I thought there was a lot of opportunity there. When I met Cor, the founder and CEO of 4me, one thing that really impressed me was the caliber of their team. Cor’s background in the space—having started two other businesses, and having successfully exited them really stood out. I thought the team had a unique perspective and depth of knowledge about the industry. That was one of the biggest factors for us.

We also have a broader thesis about how data flows through a lot of these industries. Historically, if you think about it, the way that a lot of technology is set up in these industries has created data problems. There are different systems and different owners for a lot of the data that is needed for these companies to manage their own workflow. As service management has evolved, and this is playing out in a lot of different industries, the need to operate across boundaries and silos has increased more and more, whether that’s geography, or technology systems, or different departments. I don’t want to get too into the weeds, but service management is broadly going through a transition where the new focus is on SIAM or Service and Integration Management. The team at 4me really built their product for that. We thought the shift in the industry really aligned with the expertise the team had, so we thought that was a good match. Plus, they were winning against the more established incumbents as a startup that was bootstrapped, so the growth was impressive. A combination of these factors led us to invest in their company.

What are your thoughts on Alchemist in general?

I think the program is great. I’ll give you a little background about Storm. We’ve been around for about 19 years, invested through five funds, and we’ve pretty much been enterprise focused for those 19 years. The last couple of funds have all been focused on software. In many ways, what Alchemist does is really a perfect fit for us. It’s definitely a sector and stage fit, because we mostly do series A investment, so that’s been fantastic. I’ve met Ravi and Danielle a few times, and I think their focus on running a slightly longer program is important, because things take longer in the enterprise space, particularly as you go into some of these deep tech industries. This helps companies get to a stage where they can really start talking about go-to-market and what levers a venture capital firm like us can bring. I think that’s critical because a lot of times, when you work with accelerators, they have great founders and great companies, but it still ends up being too early for us.\ Alchemist has set up a good model, a long enough program with good mentorship and support, where you get to a stage where a VC firm like us can add a lot of value. I think I’ve been going to Alchemist Demo Day since the second Demo Day. It’s been great working with their companies and seeing them as they grow.

What’s the size of your current fund and how does that compare to funds at a similar stage in Silicon Valley?

Our current fund is $180M, which has been about average for the previous funds as well. Funds are obviously getting bigger, just given some of the recent raises we’ve seen. We’ve decided to stay at a similar size, primarily because we really focus on investing in companies just as they’re getting to the product market fit stage and we work with them on finding go-to-market fit and scaling beyond that. We help them think about building the right sales model, building the right playbook, and thinking about what hires they should make. We can definitely make the fund bigger and bring on more investors, but we’ve found that this has worked for us. Companies that we really want to work with are in that early stage, where they want that first institutional investor. We’ll partner with them and help them scale through the right process.

What’s the typical check size and how is that typically structured?

Typically, our check sizes for the A rounds are in the $2M to $5M range. We can go lower, and occasionally we’ll do seed rounds, or we’ll do larger rounds sometimes. Storm has invested in about 150 companies, led investments in a number of cases, and we’ve co-led, so we’ve pretty much worked with everyone. We’re not very rigid in terms of needing 20% ownership, but we like to own as much as possible, because we tend to be really hands-on with our companies. We’re definitely not a fund that makes a huge number of investments. We are somewhat concentrated and would rather go deeper with our companies than just go broader.

Is there a stage you typically prefer to invest?

Series A. The sweet spot is definitely the A for us.

Do you have a specific vision or focus that differentiates you from other funds?

The emphasis on go-to-market. We spend a lot of time working within the firm and working with other organizations that we can bring in to support our portfolio. Once you’re selling your product to a handful of customers, and there’s repeatability in the use case, we can help you figure out how to scale. One of the biggest issues is that early on, getting to that $500K or $1M run rate, a lot of that comes from founder sales. It varies depending on the size of the account and other factors, but when you make that transition to a sales team and the founder steps back a little bit, a lot of times that process doesn’t go smoothly. The depth of knowledge that the founders have about the sector, the problem they’re solving—it’s hard to replicate that throughout the teams. What we try to do is really think about the go-to-market as a science as much as we can. We want to think about the right playbook, the right sales model, the right customer you’re selling to, and really building those processes out.

We spend a lot of time with our companies building out that process hands-on, so that they can effectively make that transition to scaling, and they don’t hit a speed bump when they get to that stage. When companies come to us, a lot of times we’ll see that they have a grand vision and a good roadmap, and have predictions that are up and to the right that we hope they’ll hit. But on occasion, they’ll stumble a little bit. A lot of it is making this transition, and getting your playbook down, with the right sales model. That’s one way that we try to differentiate from other firms. Additionally, we’ve been very focused on enterprise for 19 years, so we have a huge network in the space across a variety of industries, that can add value to our companies.

How do you think you differentiate yourself individually from other VC’s?

To build on what we talked about, we have built deep relationships in various enterprise sectors given the focus over many years. I’ll give you an example: I spend a lot of time focusing on healthcare at Storm. Over the last few years, we’ve built a strong healthcare practice. As part of that, we have connections to a lot of health systems across the country—including physicians, practitioners, and entrepreneurs. In that one example, we can definitely bring a lot of those connections to bear for the startup. We’ve sat in a lot of these practitioner’s offices, so we can really understand the deeper workflows, that comes with selling to major players and providers. A lot of the work that happens on the backend isn’t really visible to these companies. That’s just one example of the insight and level of connection that we can bring for our portfolio. In terms of the broader firm itself, the go-to-market is a big area, but we also bring in a lot of experts who can specifically give advice on sales and marketing. One other area where I’ve spent a lot of time is security. In fact, we have a number of CSO’s working out of our offices pretty often.

What makes an investment particularly compelling and what’s a big red flag that would make you pass?

In terms of red flags, maybe this is an obvious one. We’re looking at mostly enterprise, so if the founders have never worked in industry, I think that’s a big red flag. It’s not that I wouldn’t talk to them or not invest, but it’s something where I’d definitely want to dig in more. Especially if it’s an area like Cor with 4me and service management, it’s hard for an outsider to really get a sense of what the problems are, and what the incentives are, in terms of why these problems get created. So, it’s not always a technology solution and it’s not always that the best tech wins in a lot of these cases. We really think hard about the unique insight that these founders are bringing, and how their background and experience really leads to that.

On the flip side, things that I would definitely look for, because we invest so early and have to bet on the team, would be the background of the founders. We also look for their early ability to win customers. A lot of times, we see founders that work hard and have passion, which enables them to get customers. However, a lot of the customers are using the product for different use cases. That’s fine early on, because they’re still trying to find the right product, but we’d like to understand what’s really working, what’s the sweet spot early on, so that they can find repeatability. I think that repeatability is important because that leads to more usage and lower churn. That’s when you’ve really found a pain point worth investing in.

We also think about market transitions, and ask if there is something fundamentally changing in the market. Not just a better version of what’s been done before, but something fundamentally changing in the market that will lead people to adapt a new technology, a new product, or a new workflow. When we meet entrepreneurs, we try to already have a thesis on the market, so that we can make faster decisions about whether the idea makes sense or not.

What do you think separates a great founder from a good founder?

One of the things is the ability to hire really great people. As a founder, you have insight into a certain area, but you can’t do it all. That’s why a founding team in general needs to be well-balanced. I think the biggest thing is being able to sell people on your vision and hiring people that are better than you. If you can hire well, I think in many cases, the rest of the issues can be addressed, because you’re getting the right set of people that can work together and solve problems. It’s a hard thing to test for, so we try to spend a lot of time with our founders.

Would you be more likely to fund a really experienced team with a mediocre idea, or a team with no experience that had an amazing idea?

It really depends on the idea and the use case. I would say I’d pick the team over the idea, because it’s unlikely you’re the only one with the idea, meaning that a lot of your success is based on execution. Ultimately, you really have to hustle and execute. On the flip side, if I can add a caveat, the one area where that can be a little more murky, is when there’s a huge market pull. In that situation, a mediocre team in a market that’s really taking off can probably execute better than a great team in a market that has no momentum. If the market is really taking off, a good team can have better outcomes than a great team in a bad market, no matter how strong they are. Oftentimes, we have theses in certain areas, so we have some view on the market and how that might impact these companies.

If there was a piece of advice that you’d give to founders who are raising money that isn’t shared enough, what would that be?

Founders often focus on the current product that they’re selling today and their long-term vision, which is grand and massive if you achieve it. However, a lot of times, in the middle, there’s a big gap. Having a clear strategy for how you’ll progress beyond the immediate pain point that you’re solving today is something that people don’t spend enough time on. I think having a viewpoint on how the market evolves is critical. It’s knowing what transitions are happening in the market and how that gives them tailwind, and understanding why that is the case.

Which investment were you most proud of and why?

Obviously, I like 4me quite a bit. I don’t know if there is one I’m most proud of. Going back to the industry transition idea, where it’s critical to find the right time to make a change in the industry, some of the best companies get the timing right, where many others are too early or too late. In healthcare, there’s a company we invested in called Lexigram, that’s helping payers and providers transition to the value-based care model. They’ve done really well. In security, there’s a company called TruSTAR that’s truly leveraging how companies share information with each other and really enabling that. Those are a few.

What areas are you most excited about now and moving forward into the future?

Security and healthcare are two areas I am excited about due to the changes taking place. A broader answer is that no matter what industry you’re in, if there’s a market transition that’s happening, I would be interested in learning more. The other thing that I think a lot about is the whole idea of the data economy. Historically, a lot of data was stored in silos across organizations, team, and geographies. Any company that is truly building insights across such data is a company that I would love to meet and speak with. So, there’s not one particular area, but these are a few of the areas that excite me.

About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures/year. Learn more about applying today.

The Math Behind Product/Market Fit


What is a best-practice, repeatable process for validating product market fit? This is one of the most common questions I am asked. As an Alchemist start-up mentor, I help founders build a sales process to close their first 10 paying lighthouse customers. During my office hours, I am lucky enough to coach technical founders who are brilliant when it comes to math and process, but still sometimes need guidance when it comes to fine-tuning strategy.

The most impactful way to determine product-market fit is a strategy I call the “1x3 Discovery Process Strategy”. For every 1 hour you code, you should spend 3 hours on discovery calls to understand, validate, and be able to apply your understanding of the market.  

The “1x3 Discover Process Strategy” will reduce cycles and increase the speed at which you can prove you are on your way to market validation and traction objectives. Here’s how:

1)  Discovery calls gather actionable data to make sure that you build what people will pay for
Discovery calls are about data. The better and more effective the questions you ask, the better the data. If you have bad data, your product market fit hypotheses will be flawed.  Your code also has a high probability of being worthless, meaning no one is using what you are building. Since, by definition, product/market fit equates to being in a good market with a product that can satisfy that market, solid data is all about confirming and ensuring the best path.
2)  Open-ended questions are crucial. Here’s where founders get it wrong
1x3 questions lead to great product data. Product market fit discovery questions need to be open-ended.  There is no data value in “Do you have x problem (yes or no)?” More impactful questions are:
  • Tell me about your current situation.

  • Why is this a problem now?

  • What have you tried in the past to solve it?

  • Why is this a priority now?

These questions are gold when it comes to understanding product/market fit. Because they are open-ended, they give the buyer/champion or influencer you are speaking with the opportunity to be thoughtful in their response. Your buyer is able to reflect about their current day and tell you, in their words, stories and examples about the problem from their point of view. Rather than asking a question that implies you know the answer or that direct the answer, an open-ended question creates the opportunity to hear answers around topics you may not have anticipated. Great founders understand how their customers think about their problems, the impacts and value of a solution to their problem, and how your solution fits within their workflow.

3)  Finding market fit

Finding market fit means that people you don’t know will pay for your solution and renew it when you increase the price. An ineffective question like “Did you like what I showed you? yes/no” doesn’t add much value or drive any understanding.  Better questions are:

  • Tell me about your ideal solution.

  • What do you like/dislike about your current solution?

  • How does what we want to do compare with your current tools?

Remember these questions are designed to ensure you validate that the prospect will PAY for your solution to their problem.

4) Charting the path for coding what customers will pay for

As tech-cofounder, coding is your superpower. Your kryptonite is your enterprise sales experience.  With the right discovery questions, you can code in half the amount of time and ensure you incorporate the right features your target wants and will buy.    

The 1x3 Discovery Process Strategy is a process to ensure you manage your time. Better data will always set you apart from your competitors. By asking the right questions, and adding to your knowledge and insights, you will come to understand the customer better than they understand themselves. Coding, from this vantage point, becomes the easy part.

About Darren Kaplan

Darren Kaplan is the Managing Director of The Last 90  http://www.thelastninety.com  an early-stage venture fund that invests and operates companies that focus on the future of work. Prior to that Mr. Kaplan was the co-founder of hiQ Labs (www.hiqlabs.com), a data science company, informed by public data sources, applied to human capital to make work better. Mr. Kaplan is an Alchemist Accelerator (https://alchemistaccelerator.com)

About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.